First state-licensed marijuana retailers to open January 1 in Colorado

Employees roll joints behind the sales counter at Medicine Man marijuana dispensary, which is to open as a recreational outlet at the start of 2014, in Denver, Friday Dec. 27, 2013. Medicine Man was among the first batch of Denver businesses which received their licenses allowing them to legally sell recreational marijuana on Friday. (AP Photo/Brennan Linsley)

By Keith Coffman

DENVER (Reuters) - The world's first state-licensed marijuana retailers, catering to Colorado's newly legal recreational market for pot, are stocking their shelves ahead of a New Year's grand opening that supporters and detractors alike see as a turning point in America's drug culture.

Possession, cultivation and private personal consumption of marijuana by adults for the sake of just getting high has already been legal in Colorado for more than year under a state constitutional amendment approved by voters.

But starting January 1, cannabis will be legally sold and taxed at specially regulated retailers in a system modeled after a regime many states have in place for alcohol sales - but which exists for marijuana nowhere outside of Colorado.

For the novelty factor alone, operators of the first eight marijuana retailers slated to open on Wednesday morning in Denver and a handful of establishments in other locations are anticipating a surge in demand for store-bought weed.

"It will be like people waiting in line for tickets to a Pink Floyd concert," said Justin Jones, 39, owner of Dank Colorado in Denver who has run a medical marijuana shop for four years and now has a recreational pot license.

Jones said he is confident he has enough marijuana on hand for Day One but less sure of inventory levels needed after that.

About 90 percent of his merchandise is in smokable form, packaged in small child-proof containers. The rest is a mixture of cannabis-infused edibles, such as cookies, candy and carbonated drinks.

"People seem to prefer smoking," he said.

FROM MEDICAL TO RECREATIONAL

Washington state voters legalized recreational marijuana at the same time Colorado did, in November 2012, but it has yet to be made commercially available there.

Pot designated strictly for medical use has been sold for some time in storefront shops in several of the nearly 20 states, including Colorado and Washington, that have deemed marijuana legal for health purposes.

But Colorado is the first to open retail pot stores, and craft a regulatory framework to license, tax and enforce its use for recreation.

Outside of the United States, Uruguay's parliament recently cleared the way for state-sanctioned marijuana sales, but the South American nation is at least months away from having a system in place.

The Netherlands has long had an informal decriminalization policy, with Amsterdam coffee shops allowed to sell marijuana products to customers. But back-end distribution of the drug to those businesses remains illegal.

"It will actually be fully legal in Colorado, at least under state law, whereas in the Netherlands it's been tolerated, not actually legal," Ethan Nadelmann, executive director of the Drug Policy Alliance, a pro-liberalization group, told reporters earlier this month.

"Colorado is essentially the first. It's really the first in which this is explicitly legal and where marijuana is being grown legally, sold wholesale legally, sold retail legally," Nadelmann said.

"This is groundbreaking," said Mike Elliot, spokesman for Colorado's Medical Marijuana Industry Group. "We are way ahead of Washington state, Amsterdam and Uruguay."

Critics of liberalized marijuana laws likewise view Colorado's new order as a landmark, albeit one they see in a more negative light.

Kevin Sabet, co-founder of Smart Approaches to Marijuana, a leading anti-legalization group, said the movement toward ending pot prohibition is sending the wrong signal to the nation's youth.

ENDING PROHIBITION

"There will still need to be a black market to serve people who are ineligible to buy on a legal market, especially kids," Sabet said. "It's almost the worst of both worlds."

Critics say the social harms of legalizing pot - from anticipated declines in economic productivity to a potential rise in traffic and workplace accidents - will outweigh any benefits.

Legalization backers point to tax revenues to be gained and argue that anti-marijuana enforcement has accomplished little but to penalize otherwise law-abiding citizens, especially minorities.

They also argue that legalization will free up strained law enforcement resources and strike a blow against drug cartels, much as repealing alcohol prohibition in the 1930s crushed bootlegging by organized crime.

But Sabet counters, "We are witnessing the birth of big marijuana," which he compared to the tobacco industry.

Under Colorado's law, however, state residents can only buy as much as an ounce of marijuana at a time, while individuals from out of state are limited to quarter-ounce purchases. State law also limits cultivation to six marijuana plants per person.

Those limits were not enough to deter a 30-year-old high school sports coach who is visiting Colorado from North Carolina but gave his name only as Matt.

"I don't really drink a whole lot, but I'd prefer to smoke a little bit and have a good time with the friends that I hang out with," he told Reuters on Friday. His New Year's plans include a "Cannabition" pot party in Denver.

Marijuana remains classified an illegal narcotic under U.S. law. But in a major policy shift in August, the Obama administration said it would give states leeway to experiment with pot legalization, and let Colorado and Washington carry out their new laws permitting recreational use.

The state has issued a total of 348 recreational pot licenses to businesses statewide, according to the Colorado Department of Revenue's Marijuana Enforcement Division.

Of those, 136 are for retail stores, 178 for cultivation operations, 31 for manufacturing of infused edibles and other sundries, and three are for testing facilities.

Last month, Colorado voters approved a combined 15 percent excise and 10 percent sales tax to be imposed on recreational pot sales, with the first $40 million raised to fund school construction projects.

The Colorado Legislative Council estimates the marijuana taxation scheme will generate $67 million annually in tax revenue to state coffers.

Only people over age 21 can buy recreational pot. Public use of marijuana remains illegal, as is driving while stoned. The state has set a blood-THC (the active ingredient in cannabis) limit of 5-nanogram-per-milliliter threshold for motorists.

Other states are taking a wait-and-see approach to the Colorado and Washington experiments before they take the leap toward legalization, said Rachel Gillette, head of Colorado's chapter of the National Organization for the Reform of Marijuana Laws.

"Colorado has found an exit strategy for the failed drug war and I hope other states will follow our lead," she said.